Untangling Your Credit After A Divorce

When a couple gets married, that often means that their finances are married, too.  Married couples join accounts and handle the debts hand-in-hand.  But, what happens to the joint finances if the couple decides to divorce?  Joint finances that once signified marriage are now just a tangled mess.

When the papers are signed and the divorce is final, the two parties may be relieved it’s all over. Unfortunately, many divorced couples have months of work ahead to clean up the financial debris of marriage.

In an article from Fox Business, a recent survey of divorced couples revealed that 40% said it took over six months to separate their finances. For over 10% of respondents, the process took over 3 years. If you and your spouse are thinking of splitting up, or already have, this is something you might want to prepare for.

Here are some steps you can take to clear up tangled credit sooner rather than later:

Review Your Reports.  Reviewing your credit reports is essential. You should understand exactly what is on the reports and your personal legal responsibility for all accounts listed. Are the accounts individual or joint accounts, or are you just an authorized user? Get your free annual credit reports from each of the three major credit reporting agencies. It’s important to understand your legal responsibility for each one of them.

Account for Joint Accounts.  Closing joint accounts at the first sign of trouble in a marriage can be a smart move.  Any joint accounts that remain open, you remain fully responsible for any and all charges made by you and your ex or soon to be ex.  If the divorce is already final, you need to have a plan for handling balances left on any joint debts – even though you’re separated for good from the other person, you are still bound by the agreement you both made when you opened the account.

Monitor Your Credit Monthly.   Don’t think that divorce automatically hurts your credit.  In the survey mentioned above, 46% of respondents said their credit scores actually improved after divorce.  But, a good amount still reported that their scores dropped.  You will be able to spot issues quickly if you are monitoring your credit score regularly during and after a divorce.

Separating from someone you originally thought you were going to spend the rest of your life with already is not easy, but once the divorce is done, separating your finances shouldn’t make the transition even harder and more drawn out.